Ever since Donald Trump took over as president of the USA, there has been considerable disruption across markets. With different statements and deadlines being announced periodically, it becomes difficult to conjecture the future. There are at least 10 major consequences that can be visualised for 2025.

First, the higher tariffs announced along with the reciprocal tariffs being spoken of with major economies like the EU, UK, India, China, Mexico and Canada, among others, would mean that there will be disruption in trade at the general level.

Exports to the USA would come under pressure due to this factor. As already seen, there have been retaliatory tariffs announced by some of these countries, which, if not curbed, can lead to an all-out trade war where all countries pursue such policies, not just the USA but others too.

Second, at the micro level, industries within countries which are dependent on exports to the USA would have to rework their strategies, as this could mean lower demand for their products going ahead. Therefore, profitability concerns would be there, which will also get reflected in the stock prices depending on the intensity of the same.

Third, export-oriented economies would witness a severe blow if there is a major slowdown, and this holds for China for certain, which is heavily dependent on exports. This has the potential to slow down global growth too. It may be too early to put a number to the same, but any significant barrier to foreign trade will retard the GDP growth.

Fourth, the outcome of higher tariffs being imposed by the USA raises the possibility of countries like China getting more aggressive in terms of pushing their exports to other markets. This would mean that the threat of dumping cannot be ruled out, which has to be monitored by the commerce ministry.

It was seen in the past, too, that China did resort to dumping (a phenomenon where goods are sold lower than cost price in other countries to capture markets). This is something which can be a major pushback to both domestic and exporting industries.

Fifth, domestic industry would feel the heat on two counts. First, if countries agree with the USA to lower tariffs to avoid the reciprocal tariffs, there would be serious implications for domestic players who will face competition.

Second, as mentioned earlier, any dumping from the third country will have the same impact of posing competition for domestic industry. Dumping, it should be remembered, is not easy to prove, and hence, until a firm policy is in place to check such practices, domestic industry will encounter uncertainty.

Sixth, a positive consequence of all these actions on tariffs is that it has also engendered new interest in countries beginning to talk to one another to negotiate trade deals. This can be seen with the recent talks India had with the UK and EU. In a way, such dialogues can lead to more bilateral or group-level trade agreements, which is good for global trade. There is, hence, a possibility of a new wave of such deals, which can, in a way, revive trade negotiations which virtually ended post the redundancy of the WTO as an institution.

Seventh, the USA has been critical of the spending of the USAID and virtually closed down funding to over 80% of schemes. While this would be big savings for the government, this will lead to a lot of distress in the least developed countries, especially in Africa, which are completely dependent on the USAID for health support.

Given the high levels of poverty and rather corrupt governments, the USAID was the only support received by these nations. This will be a concern for the future of these economies. In fact, post the economic altercation with the EU, several countries like France, Germany, etc., are also scaling back on such disbursements. This is not a good sign for sure.

Eight, the constant talk of tariffs and making America great again has had a sharp impact on the currency, with the dollar getting stronger. This has meant that all global currencies have weakened, which has caused considerable volatility. India has also felt the tremors with constant intervention by the RBI to quell this excess volatility.

This, in turn, has affected liquidity, as any sale of dollars in the market results in liquidity being drawn out. To counter this development, it has become expedient for the RBI to boost liquidity through inducing measures consistently. On the positive side, the price of gold has gone up as investors are preferring the metal as a safe haven.

Nine, on account of the triad of policies – higher tariffs, lower taxation and evicting illegal immigrants, the Federal Reserve has been on guard and could go slow on lowering interest rates. The dilemma is that while there is fear of inflation, if rates are cut at a rapid rate (4 cuts were spoken of before the elections), the possible slowdown in the economy can cause a quandary for the central bank where a rate cut may have to be expedited. Further, the US president has been more than vocal on having more rate cuts.

Last, the result of the Make America Great Again doctrine being backed by a stronger dollar and possibly higher Fed rates for long has caused investors to flock back to the USA. This means that emerging markets are now less preferred, as they are also the exporting countries, which can face headwinds on account of the tariffs. This has sent FPIs out of these markets, and India has already witnessed negative equity flows this year. The ultimate impact has been felt on the stock market, where there have been significant corrections in the benchmark indices.

Hence, the trauma caused by the Trump administration has been all-encompassing, leaving virtually no major economy out of the repercussions, whether perceived or real.

The author is Chief Economist, Bank of Baroda and author of ‘Corporate Quirks: The Darker Side of the Sun’. Views are personal